A City Leases Equipment on January 1, 2019 by Means

A city leases equipment on January 1, 2019 by means of a long-term lease agreement. The agreement calls for paying the leasing company $300,000 in three $100,000 annual payments, starting December 31, 2019. The present value of the three lease payments, using a 6% annual interest rate, is $267,301. The city will make the lease payments from the General Fund. What journal entry should the city make in the General Fund on January 1, 2019?
a.
$\begin{array}{ll}\text { Expenditures-capital outlay } & 300,000 \\\quad \text { Other financing source-long-term leases } &&32,699 \\\quad \text { Leases payable } && 267,301 \\\end{array}$

b.
$\begin{array}{ll}\text { Expenditures-capital outlay } &267,301 \\\quad \text { Leases payable } & &267,301 \\\end{array}$

c.
$\begin{array}{ll}\text { Expenditures-capital outlay } &267,301 \\\quad \text { Other financing source-long-term leases } &&267,301 \\\end{array}$

d.
$\begin{array}{ll}\text { Expenditures-capital outlay } &300,000\\\quad \text { Leases payable }&&300,000\end{array}$